Kabel Deutschland buyout could face legal challenges in Germany

Oliver Smith is a senior reporter at The Memo, an online publication curious about the future of technology. He was formerly a reporter at City A.M.

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VODAFONE could face further difficulties in its takeover of Kabel Deutschland as the cable operator’s remaining investors look to improve Vodafone’s €87-a-share offer, which was accepted by the majority of shareholders earlier this month.

Elliot Management Corporation, which increased its holdings in Kabel Deutschland to 10.9 per cent ahead of Vodafone’s offer deadline earlier this month, could launch a challenge under German takeover law to raise Vodafone’s offer price.

Vodafone has remained committed to its initial offer price for Kabel Deutschland, refusing to change the terms of the deal earlier this month despite risks that investors could derail the deal.

According to German takeover law, once an acquirer holds a majority stake in a company it must offer minority shareholders a fair market price for remaining shares.

If legal action goes ahead, German courts could be left to decide whether Vodafone’s €87 (£73) offer is still a fair price for Kabel Deutschland.

Shares in Kabel Deutschland are now trading at €94, up more than 10 per cent since the deal was accepted by the majority of shareholders on 10 September.